THE former Deputy Governor of the Reserve Bank of India, Dr Rakesh Mohan, who assumed office as the Economic Affairs Secretary on Monday, said the Government has to keep a close watch on the oil price situation. He said that fundamentals of the economy are healthy.

"The economy is looking good. We will have to keep a watch on oil price situation," Dr Mohan told reporters after taking charge.

Queried on the inflation levels, he said nothing had changed since October 26 when the RBI presented the monetary and credit policy. The policy revised the annual inflation rate from 5 per cent to 6.5 per cent

Dr Mohan will be part of a new team in the Finance Ministry that will take over, as the preparation for next year's Budget takes off. Recently, the Government appointed Dr Parthasarathy Shome as the Advisor to the Finance Minister, Mr P. Chidambaram. The Finance Ministry also has a new Revenue Secretary - Mr K.M. Chandrasekhar.

The Expenditure Secretary, Mr D. Swarup, who is also in charge of the Budget division, is expected to retire this year-end, but indications are that he will get an extension.